Birt quits McKinsey over conflict of interest fears

An e-mail circulated to the London partners of the company and seen by The Independent reveals that Lord Birt, a former director general of the BBC, stopped working as a consultant to McKinsey in June by mutual consent. The company said the decision to terminate Lord Birt's contract was made in March and "reflected a desire on both sides to avoid any potential misunderstanding about Lord Birt's role with McKinsey's work in the public sector - though in fact no conflict ever arose".

The companyhas won contracts worth as much as £40m since Lord Birt was asked to work for the Prime Minister as an unpaid policy adviser. A statement from Lord Birt yesterday said: "I wish to make it clear, as McKinsey has done, that no conflict of interest ever arose between my consultancy role with McKinsey's Global Media Practice and the firm's UK public sector work."

There are other links between No 10 and McKinsey, and the movement of partners and civil servants between the company and Downing Street has led to suggestions that there is a revolving door between them. Only last month, for example, David Bennett, a director of McKinsey who retired in February, was appointed head of No 10's policy directorate, one of the most important roles in the Civil Service. Sir Michael Barber, who ran the Prime Minister's delivery unit, is leaving Whitehall to join McKinsey later this year.

Lord Birt's role at No 10 while continuing to be paid by McKinsey was criticised by Tory MPs. He has undertaken reviews on the UK's transport, crime, education and health.

Chris Grayling, the shadow Leader of the Commons, said: "I am pleased Lord Birt has realised his two positions were incompatible. It is essential that there is a clear divide between what happens in government and commercial contractors to government."

As well as Lord Birt and Mr Bennett, a number of former McKinsey partners work at Downing Street. Adair Turner, formerly of McKinsey, was asked by the Government to make sweeping changes to the UK pension system. In 2001 and 2002, Nick Lovegrove, a director at McKinsey, acted as an unpaid adviser to the Prime Minister.

Mr Grayling said he was still concerned about the number of McKinsey connections in government: "There are bound to be question marks over what appear to be personnel swaps ... when McKinsey is winning large contracts."